The right-back, 31, has moved to the Madejski Stadium from Stoke City for a nominal fee. He spent the second half of last season on loan at the Royals.
"Andy was universally wanted by the manager, myself, the board and all our supporters as well," said Sir John Madejski, the Reading chairman.
"There was interest from other clubs but we`ve finally got our man. He was a real stalwart when he was on loan and we are delighted to have him."
Bristol City have signed the winger Albert Adomah from Barnet. Adomah, 22, was out-of-contract with the Bees and has signed a three-year contract at ashton Gate.
As he is under 24 a transfer fee will have to be paid, with a Football League tribunal setting the fee if no agreement can be found between the clubs. He is a former target for Scunthorpe.
Defender Clint Hill has completed a move from Crystal Palace to Championship rivals Queens Park Rangers. Hill, 31, worked under R's manager Neil Warnock at Palace.
"Neil played a massive role in my decision to move to QPR - he's such an infectious character," Hill told the Rangers official website.
"He was probably the only manager who could tempt me to stay in the south."
Watford have signed the Republic of Ireland goalkeeper Rene Gilmartin from Walsall.
Gilmartin, 23, has signed a two-year contract at Vicarage Road. He was out-of-contract at the Saddlers but they are entitled to a transfer fee as he is under the age of 24.
The Hornets have also signed defender Tom Aldred from Carlisle United. Aldred, 19, has also signed a two-year deal. Like Gilmartin, he was out-of-contract at Brunton Park and a transfer fee will have to be paid.
Burnley have backed out of a move for the Hearts winger Andrew Driver after the Scottish Premier League side turned down two bids.
"We have made our interest in Driver perfectly clear and have offered some very significant sums. I have to say now that enough is enough," said Brian Laws, the Clarets manager.
"The latest offer was very significant indeed when you consider he is a guy who hasn't played a lot over the past year and is currently injured."
Cardiff City have denied claims that Sam Hammam, former owner of the club, could return in any capacity. The South Wales Echo claimed talks had taken place between Hammam and the club's new Malaysian owners.
Ipswich Town have been linked with a move for DJ Campbell, the Leicester City forward.
He ended last season on loan at Blackpool, and they would appear to be favourites for his signature still given their promotion to the Premier League.